Flash Index slips to 104.1 in February

Flash Index slips to 104.1 in February

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The University of Illinois Flash Index, which measures the state's economy, slipped to 104.1 in February, after two consecutive months of increase. The drop from 104.4 in January returns the index to where it stood in November 2016, which was its lowest level since late 2012.

The economy continues to grow - because the readings are above 100, which marks the difference between growth and contraction - but growth in February was slower than the two previous months.

"There is considerable uncertainty about future economic policy both at the national and Illinois level," said economist J. Fred Giertz, who compiles the Flash Index for the university's Institute of Government and Public Affairs. "This is marked by positive signs, such as buoyant financial markets and low unemployment levels.

"But there is still downside risk relating to unresolved budget issues in Springfield and a potential deadlock relating to the new Trump administration’s economic plans," Giertz said.

Sales tax and individual income tax receipts in February were down from the same month last year after adjusting for inflation. Corporate tax receipts are no longer consistent with past years because of new processing procedures in the Department of Revenue necessitating ad hoc adjustments. This problem will be addressed with structural changes in the Flash Index that will be incorporated in the near future, Giertz said.

The Flash Index is a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income. Tax receipts from corporate income (estimated), personal income and retail sales are adjusted for inflation before growth rates are calculated. The growth rate for each component is then calculated for the 12-month period using data through February 28, 2017.